5 Things You Should Know About Forming an LLC


One important step in getting your new business off on the right foot is establishing it as a legal business entity. There are a few directions you could take here, including sole proprietorship and general partnership, but those entities place owners at high risk, with few protections.

A limited liability company, or LLC, is a great option for businesses with a single owner, or for small startup partnerships. Once formed, an LLC can protect owners from business liabilities while at the same time providing a simple business structure with limited responsibilities and oversight by the state.

Here are five things you should know about forming an LLC:

  • An LLC gives you the best of two worlds. With this business entity you retain the autonomy of operating a sole proprietorship or general partnership, yet have the protections of a corporation. Although an LLC is a bit more complicated to set up than a sole proprietorship, it is much easier to operate than a corporation.
  • LLCs offer flexibility for owners. You can choose how you want your LLC to be taxed, make autonomous decisions about management and daily operations, and decide how profits will be distributed among owners. You do not need to consult a board of directors as you would with a corporation.
  • The owners of an LLC are protected from the company’s liabilities. For example, if the company has unpaid bills, creditors cannot come after the owners’ personal assets to satisfy business debts. However, the LLC is automatically treated as a sole proprietorship for tax purposes if there is only one owner. You can get around that by distributing shares to one or two other individuals, but they cannot be your spouse.
  • LLC is a great business structure for most small businesses. However, because of tax restrictions, an LLC is not suitable if your business is financed by a venture capital firm. If you plan on selling public stock options in the future, forming a corporation may be a better option. You can also switch entities if you find your company growing faster or larger than expected.

Forming your LLC can be done in four simple steps:

  • Choose a name for your LLC. The name cannot already be in use, and should not sound too similar to a name already in use by another registered company.
  • Decide how your business will be managed. Will all owners have an equal say in day-to-day management and operations, or will you hire a manager to run things? Will you have employees, or will you be hands-on in daily operations?
  • File your Articles of Organization with your state’s secretary of state. Windsor’s online filing service can make this a quick and efficient process. If you choose to file on your own, you may want to have an attorney take a look at the paperwork before you submit it.
  • Create an Operating Agreement: This important document details the structure of your LLC, how it will be managed and operated, how profits will be distributed and more. The Operating Agreement is essentially a roadmap of how your business will be run, and it legitimizes your LLC as an entity.

Windsor Can Help

Ready to form your LLC? Windsor can help! We offer fast, easy and accurate packages that guide you through the process of forming your LLC without a lot of guesswork.
Why muddle your way through the formation of your LLC when you can breeze through the process in a few simple steps? With Windsor, your company can be up and running as a fully formed LLC in no time.

Share on social

Leave a comment

Your email address will not be published. Required fields are marked *